Snowbirds Can Be Taxed as Florida Residents: Here’s How…
Recent changes made Florida a great destination to escape taxes as well as winter, but snowbirds don’t have to completely give up their summers in New England.
NEW YORK – Shorter days, leafless trees and frost on the ground are all signs that it’s time for snowbirds to head south for the winter. Of course, I’m not talking about real birds – “snowbirds” are people who live up north during the warm months and head south during the winter. And if you’re one of the thousands of snowbirds heading to Florida this year, I bet you’ll hear a lot of chatter about the tax benefits of being a resident. After all, it’s one of only nine states without an income tax.
So if your summer home is in one of those high-tax states up north you can potentially save thousands of dollars each year if you can establish residency in Florida instead.
But you can’t just say “I’m a Florida resident” and have the income tax bill from your summer state magically disappear. You need to show that FL is your primary and permanent home. It’s your actions, not your words, that count the most.
That means cutting as many northern ties as possible and putting down roots in FL. But no matter how rooted you become, don’t be surprised if your summer state still wants you to pay taxes as a resident on all your income (instead of paying tax only on in-state income as a nonresident). Tax agencies in many high-tax northern states have well-earned reputations for fighting wealthier snowbirds who suddenly claim to be Florida residents. So, if you’re going to make that claim, be sure you can back it up.
Here are 15 things you can do to show that you are, in fact, a resident if your summer state challenges your residency status.
Spend most of your time in Florida
The majority of states have what’s called a 183-day rule. This basically means the state will tax you as a resident if you own a home there and spend at least 183 days during the year in the state. Some states require more in-state days to be considered a resident. The days don’t have to be consecutive, and even part of a day can count as a full day.
Obviously, if you spend more than half your time in Florida, you won’t reach the 183-day threshold in your summer state. Can’t spend that much time here? Then take a vacation, visit, or otherwise spend time in some other location. Anything to avoid spending 183 days or more in your high-tax summer state.
It’s also a good idea to keep a log of where you are each day of the year. This is just in case the tax agency from your northern state picks you for a residency audit. Keep receipts from the time you spend here too. This will also helps if you’re audited. For instance, if you had dinner at a FL restaurant, the receipt will help prove that you were here on that particular day.
Obtain a Florida driver’s license
Getting a FL driver’s license is a must if you really want to be a Florida resident. In fact, this is something you should do right away, since you’ll need the license to vote, apply for property tax breaks, and do other things that will help you establish residency.
New residents must apply for a FL driver’s license in person at any local office offering driver licenses services. The fee for an initial Florida Class E license is $48. You’ll also need to submit specific documents to obtain a REAL-ID compliant driver’s license. The list of required documents for U.S. citizens can be found on the Florida Department of Highway Safety and Motor Vehicles’ website.
Register your vehicles in Florida
When you’re getting your driver’s license, make sure you register your car or truck here, too. If you own an RV or boat, register it in Florida as well. This is further evidence that you consider Florida your permanent home.
You’ll have to pay a registration fee. The amount is based on the type and/or weight of the vehicle. A list of the various motor vehicle registration fees can be found on the Florida Department of Highway Safety and Motor Vehicles’ website.
Northerners are struggling. They love winter sunshine and low taxes, but a decision to move 1,000 miles to Fla. isn’t easy. Will homesickness set in? How much does a trip “back home” to see family cost? And how much tax savings are we talking about?
Vote in Florida
Where you’re registered to vote says a lot about the place you see as your permanent home. So, to be seen as a Florida resident, make sure you register to vote – and actually vote – in Florida.
You can register to vote in Florida by completing a paper application and delivering it in person or by mail to the Division of Elections, any supervisor of an elections’ office, an office that issues driver’s licenses, or a voter registration agency (e.g., public assistance office, center for independent living, office serving persons with disabilities, public library, or armed forces recruitment office). You can also register online at registertovoteflorida.gov. You’ll need a Florida driver’s license (or ID card) and the last four digits of your Social Security number to complete the online registration.
Buy or rent a bigger home in Florida
Let’s face it … it doesn’t really look like you intend to make Florida your permanent home if you own a giant house up north but only rent a tiny apartment here. That’s why New York, for example, considers the size of each home a snowbird owns or rents to be an important factor in determining residency. So, if possible, get a home that’s at least roughly the same size as your northern home – although it’s better if your home in Florida is larger.
If your summer home is in New York, at least the state will consider home size in the context of the geographic area in which each residence is located. For example, while a 3,000 square-foot apartment in Manhattan may pale in comparison to a palatial home in Florida, it nevertheless may still be spacious by New York City standards.
Enroll your children in Florida schools
If you have minor children, have them enroll in a Florida school. Why? Because the quality of the local schools is usually an important factor for parents deciding where to live. This is true whether the schools are public or private. So, for example, if your children attend a boarding school up north and rarely visit your Florida residence, this could be evidence that you don’t consider Florida to be your primary and permanent home.
Tell people you’re a Florida resident
Yeah, we told you in the introduction that you can’t just say “I’m a Florida resident” to change your residency for state tax purposes. And that’s true – you can’t just declare that you’re a Florida resident. But even if you do all the other things we’re recommending here, you’ll never convince a tax auditor from up north that you’re a Florida resident if you don’t present yourself as a one to the rest of the world. So, if you meet someone new, tell them you’re from Florida. If you’re filling out a form that asks for your address, use your Florida address. And update your Facebook page so that your Florida town is listed as your current home.
Auditors will look for any indication that you don’t really think of Florida as your primary and permanent home – don’t give them any ammunition.
Tell the State of Florida that you’re a resident, too. File a “Declaration of Domicile” with the clerk of circuit court in the Florida county where you live. (“Domicile” is a legal term that generally means the place that you intend to be your primary and permanent home.) There isn’t a standard, statewide form that you can use. Instead, each county will have its own version – as an example, click here for the Broward County form.
Keep important personal items in Florida
Tax auditors know that most people keep prized personal possessions in their primary home. So, bring your most treasured items down here for safekeeping to show that you consider the state to be your primary and permanent home. This includes all things that are near and dear to your heart, including photo albums, wedding dresses, family heirlooms, stamp or coin collections, works of art, rare books, and any other item that has sentimental value. Pets fall into this category, too.
Socialize in Florida
To show that your life is now centered in Florida, join clubs, take up hobbies, volunteer and meet new people in the state. Tax auditors are going to question your resident credentials if you’re constantly heading back up north to socialize. You can keep your northern friends, but make new ones in Florida, too. (Invite your Yankee friends down to Florida for a week of winter sun and sand … they’ll love you for it!) If you’re already a member of a national organization like the Lions Club or VFW, change the address on file to your Florida address and attend meetings in Florida.
Visit doctors, lawyers and CPAs in Florida
It can be hard leaving a family doctor up north that you’ve been seeing for decades. But you need to do just that if you want to convince a tax auditor that you’ve really settled down here. The same goes for dentists, lawyers, accountants, and other professionals – you should replace them with new people in Florida.
It’s probably OK to see a specialist once in a while outside Florida, but your regular doctor (or other professional) should be in the Sunshine State. If you want to go to the extra mile, start seeing a barber or hair stylist here, too.
Do your banking in Florida
Even in today’s world of online banking, tax auditors know most people park their money in banks near home. So, if you’re claiming to be a FL resident, move your money to a Florida bank. It can be a national bank, but there should be a branch close to your FL home. You should be able to do your banking in person (including renting a safe deposit box). You’ll also want to make sure all bank statements are sent to your Florida address.
This advice extends to all your financial activities. Start working with Florida-based brokers, financial planners, insurance agents and the like. And, again, make sure all statements, payments and notices are sent to your home here, including credit card statements. If you’re retired, have your Social Security checks or retirement plan distributions mailed here as well, or deposited into a FL bank.
Pay taxes as a Florida resident
Sure, there’s no state income tax, but that doesn’t mean residents don’t pay other taxes. For example, you still have to pay federal income taxes as a Florida resident. So, when filing your next federal 1040, make sure you list your Florida address as your home address. You should also change your address on file with the IRS by submitting Form 8822.
As for taxes, make sure you pay your local real estate taxes on time and in full. If you own a business, are self-employed, or rent out property, you might also owe personal property taxes. If you’re not paying these taxes as required, your standing as a resident will be diminished.
Apply for a Florida Homestead Property Tax Exemption
In addition to paying taxes, take advantage of the state’s tax breaks for residents. If you own a home here, apply for the homestead property tax exemption. Not only could your home’s taxable value be reduced by as much as $50,000, but it’s further evidence of you’re a FL resident. That’s a win-win!
To apply, submit Form DR-501 and all required documentation to the property appraiser in the FL a county where the property is located. You can also use the form to apply for property tax breaks. Some are available to disabled or blind persons, senior citizens, widow(er)s, veterans, and first responders.
If a similar tax break is available in your northern state, don’t claim it. Especially if it’s only available to residents. If you do, you’re telling your summer state that you are a resident there, not in Florida.
Work in Florida
Do you work at home or in multiple locations? Make sure you list your Florida address as your home of record. Paychecks and W-2 forms should be sent here, and all your benefits should be based in the state.
Are you an independent contractor? All invoices and other correspondence should include your local address. Payments and 1099 forms should be sent here, too.
If you’re a doctor, lawyer or other professional, get licensed to practice here.
Move your business to the sunshine state
Own a business up north? Moving it here will certainly help your case if your status as a Florida resident is challenged.
If moving your northern business down here isn’t possible, running it from Florida might be an option. However, business owners in Florida who are deeply immersed in their company’s operations up north can have a hard time establishing residency here. Even if you’re running your business from a Miami Beach cabana. Tax auditors up north will see substantial involvement in the management of a business in their state as evidence of residency. It will be weighed along with all other factors though. This type of evidence can persuade a court that you’re not really a FL resident.
The degree of your involvement in the business’ day-to-day operations will be looked at closely. You don’t necessarily have to sell the business or relinquish your management role. By taking more of a “hands-off” approach will definitely support your claim for Florida residency.
2019 The Kiplinger Washington Editors
By Rocky Mengle, The Kiplinger Washington Editors